UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended November 27, 2004

 

Commission File No.: 1-14130

 

MSC INDUSTRIAL DIRECT CO., INC.

(Exact name of registrant as specified in its charter)

 

 

(516) 812-2000

(Registrant’s telephone number, including area code)

 

Website: www.mscdirect.com

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ý  No o

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).   Yes ý  No o

 

As of January 4, 2005, 47,978,877 shares of Class A common stock and 21,006,394 shares of Class B common stock of the registrant were outstanding.

 

 

SAFE HARBOR STATEMENT

 

This Quarterly Report on Form 10-Q (the “Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Discussions containing such forward-looking statements may be found in Items 2 and 3 hereof, as well as within this Report generally. In addition, when used in this Report, the words “believes,” “anticipates,” “expects,” “estimates,” “plans,” “intends,” and similar expressions are intended to identify forward-looking statements. All forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from projected results, as discussed below under the heading “Risk Factors”. Factors that may cause these differences include, but are not limited to:

 

•                   changing customer and product mixes;

 

•                   changing market conditions and industry consolidation;

 

•                   competition;

 

•                   general economic conditions in the markets in which the Company operates;

 

•                   risk of cancellation or rescheduling of orders;

 

•                   work stoppages at transportation centers or shipping ports;

 

•                   the risk of war, terrorism and similar hostilities;

 

•                   dependence on our information systems;

 

•                   dependence on key personnel; and

 

•                   the other matters discussed in the Business Description contained in the Company’s Annual Report on Form 10-K for the fiscal year ended August 28, 2004.

 

Consequently, such forward-looking statements should be regarded solely as the Company’s current plans, estimates and beliefs. The Company does not undertake any obligation to update any forward-looking statements to reflect future events or circumstances after the date of such statements.

 

Available Information

 

We file annual, quarterly and current reports, information statements and other information with the Securities and Exchange Commission (the “SEC”). The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov.

 

Internet Address

 

The Company’s Internet address is www.mscdirect.com. We make available on or through our investor relations page on our web site, free of charge, our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and beneficial ownership reports on Forms 3, 4, and 5 and amendments to those reports as soon as reasonably practicable after this material is electronically filed or furnished to the SEC. We also make available, on our website, the charters of the committees of our Board of Directors and Management’s Code of Ethics, the Code of Business Conduct and Corporate Governance Guidelines pursuant to SEC requirements and New York Stock Exchange listing standards.

 

 

MSC INDUSTRIAL DIRECT CO., INC.

 

INDEX

 

		Pages
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Balance Sheets November  27, 2004 and August 28, 2004	1
	Consolidated Statements of Income Thirteen weeks ended November 27, 2004 and November 29, 2003	2
	Consolidated Statement of Shareholders’ Equity Thirteen weeks ended November 27, 2004	3
	Consolidated Statements of Cash Flows Thirteen weeks ended November 27, 2004 and November 29, 2003	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19
Item 4.	Controls and Procedures	20
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 6.	Exhibits	22
SIGNATURES		23

 

i

 

PART I.FINANCIAL INFORMATION

 

Item 1. Consolidated Financial Statements (Unaudited)

 

MSC INDUSTRIAL DIRECT CO., INC.

Consolidated Balance Sheets

(In thousands, except share data)

 

		November 27, 2004			August 28, 2004
		(Unaudited)			(Audited)
ASSETS
Current Assets:
Cash and cash equivalents		$	68,575		$	39,517
Available-for-sale securities		3,052			6,000
Accounts receivable, net of allowance for doubtful accounts of $2,411 and $2,447, respectively		119,948			114,077
Inventories		229,745			225,427
Prepaid expenses and other current assets		18,473			16,368
Deferred income taxes		9,895			10,000
Total current assets		449,688			411,389
Available-for-sale securities		142,210			137,797
Property, Plant and Equipment, net		101,778			103,284
Goodwill		63,202			63,202
Other assets		11,486			13,715
Total assets		$	768,364		$	729,387
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	42,265		$	36,233
Accrued liabilities		52,120			48,638
Current portion of long-term notes payable		142			142
Total current liabilities		94,527			85,013
Long-term notes payable		949			997
Deferred income tax liabilities		24,752			25,171
Total liabilities		120,228			111,181
Shareholders’ Equity:
Preferred stock; $0.001 par value; 5,000,000 shares authorized; none issued and outstanding		—			—
Class A common stock (one vote per share); $0.001 par value; 100,000,000 shares authorized; 53,293,640 and 52,428,363 shares issued, and 47,934,568 and 47,056,952 shares outstanding, respectively		53			52
Class B common stock (ten votes per share); $0.001 par value; 50,000,000 shares authorized; 21,006,394 and 21,246,394 shares issued and outstanding, respectively		21			21
Additional paid-in capital		325,168			314,710
Retained earnings		412,540			393,341
Accumulated other comprehensive loss		(44		)	(12		)
Class A treasury stock, at cost, 5,359,072, and 5,371,411 shares, respectively		(88,338		)	(88,580		)
Deferred stock compensation		(1,264		)	(1,326		)
Total shareholders’ equity		648,136			618,206
Total Liabilities and Shareholders’ Equity		$	768,364		$	729,387

 

See accompanying notes.

 

1

 

MSC INDUSTRIAL DIRECT CO., INC.

Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

 

		Thirteen Weeks Ended
		November 27, 2004			November 29,2003
Net sales		$	263,328		$	222,761
Cost of goods sold		144,527			122,501
Gross profit		118,801			100,260
Operating expenses		76,904			73,369
Income from operations		41,897			26,891
Other income:
Interest income, net		776			292
Other (expense) income, net		(71		)	50
Total other income		705			342
Income before provision for income taxes		42,602			27,233
Provision for income taxes		16,615			10,757
Net income		$	25,987		$	16,476
Per Share Information (Note 1):
Net income per common share:
Basic		$	0.38		$	0.25
Diluted		$	0.37		$	0.24